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Heterogeneity-promoting optimal procurement

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Author Info

  • Juan J. Ganuza

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  • Lambros Pechlivanos

Abstract

When procurement takes place in the presence of horizontally differentiated contractors, the design of the object being procured affects the resulting degree of competition. This paper highlights the interaction between the optimal procurement mechanism and the design choice. Contrary to conventional wisdom, the sponsor's design choice, instead of homogenizing the market to generate competition, promotes heterogeneity.

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File URL: http://www.econ.upf.edu/docs/papers/downloads/377.pdf
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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 377.

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Date of creation: Jan 1998
Date of revision: Jan 1999
Handle: RePEc:upf:upfgen:377

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Web page: http://www.econ.upf.edu/

Related research

Keywords: Procurement; project design; horizontal differentiation;

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  1. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
  2. Brennan, Timothy J, 1996. "Making Economic Sense of the Telecommunications Act of 1996," Industrial and Corporate Change, Oxford University Press, vol. 5(4), pages 941-61.
  3. Ganuza, Juan-Jose & Pechlivanos, Lambros, 2000. "Heterogeneity-promoting optimal procurement," Economics Letters, Elsevier, vol. 67(1), pages 105-112, April.
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Cited by:
  1. Juan J. Ganuza & Lambros Pechlivanos, 1998. "Heterogeneity-promoting optimal procurement," Economics Working Papers 377, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 1999.
  2. John Asker & Estelle Cantillon, 2010. "Procurement when price and quality matter," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 1-34.
  3. Asker, John & Cantillon, Estelle, 2005. "Optimal Procurement When Both Price and Quality Matter," CEPR Discussion Papers 5276, C.E.P.R. Discussion Papers.

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